Abstract : This study examines the impact of gross domestic product, fiscal deficit, debt servicing amount and fiscal budget on total public debt. Total public debt is selected dependent variable. The selected independent variables are gross domestic debt, fiscal deficit, debt servicing amount and fiscal budget. The study is based on secondary data with 95 observations for the study period from 2005/06 to 2023/24. The data were collected from annual report of Nepal Government and Ministry of Finance. The correlation coefficients and regression models are estimated to test the significance and importance of gross domestic product, fiscal deficit, debt servicing amount and fiscal budget on total public debt. The size of GDP has positively contributed to the growth of public debt, indicating that as the economy expands, the government’s borrowing capacity and financing needs also increase.It indicates that the size of the total budget has a positive impact on the size of public debt, reflecting that higher government expenditure and budget expansion have led to increased borrowing requirementsThis suggests that an increase in the fiscal deficit has contributed to the rise in public debt, as budget shortfalls are generally financed through internal and external borrowingIt indicates that the debt servicing amount has a positive impact on the size of public debt, showing that higher repayment obligations and interest burdens have further increased the overall level of public debt in NepalPublic debt in Nepal has increased due to the expansion of GDP size, expansion of total budget, rising fiscal deficit, and higher debt servicing obligations, which together have contributed to an increase in the overall size of public debt of Nepal.
Dhungel et al. (Thu,) studied this question.